Action to Quiet Title

Question:

I bought 60 acres of commercial property ten years ago for $30,000.00. I did not file the deed with the Register of Deeds. The former owner again sold the property to his heirs for $50.00 last year and they recorded their deed. If they would have gone out and looked at the property, they would have seen that it was owned by someone else. Who should prevail in this situation?The legal action required when two or more persons are fighting over real property is called an action to quiet title. The person asserting ownership files a complaint requesting that the judge enter an order in their favor.

A common misconception is that deed must be recorded with the Register of Deeds in order to be legal. A deed is legal by itself and does not need to be recorded, however, recording does provide some protection. Recording statutes protect bonafide purchasers for value, known as BFPs, from secret, unrecorded interests of others. When a person records their deed, they give notice to the world that the incident property has been conveyed to them and they have title. This puts subsequent purchasers on guard in just the situation of which the question inquires.

The key to protection is that recording protects BFPs and thus, in order to qualify one must be a BFP. Protection will not be afforded against an unrecorded deed if the grantee did not pay value in a bonafide purchase. Again, the validity of a deed is not dependent upon recordation. However, grantees who do not record their deeds may lose out against subsequent BFPs.

Therefore, who is a BFP? A BFP is one who is a purchaser who takes the property/deed without any notice of the prior deed and who pays valuable consideration. Notice includes knowledge obtained from any source, from inspecting the records and the property itself. It can be actual, constructive and inquiry. Knowledge will be imputed to a subsequent purchaser who could have learned of the prior deed via an inspection or via an inquiry to the possessor. A subsequent purchaser must also pay valuable consideration to have protection. This means that they cannot be donees, heirs, or devisees and they must give substantial pecuniary value. The BFP must prove that real consideration was paid and not love and affection for example.

In this situation, the first buyer should prevail because the second buyer did not pay substantial value and they would have discovered the true owner’s possession had they inspected the property. The statute providing for recording of deeds with the Register of Deeds grants protection to purchasers for value.

Discussion:

The answer depends. See MCL 600.5801 Limitation on actions; time periods; defendant claiming title under deed, court-ordered sale, tax deed, or will; other cases.

Sec. 5801.

No person may bring or maintain any action for the recovery or possession of any lands or make any entry upon any lands unless, after the claim or right to make the entry first accrued to himself or to someone through whom he claims, he commences the action or makes the entry within the periods of time prescribed by this section.

(1) When the defendant claims title to the land in question by or through some deed made upon the sale of the premises by an executor, administrator, guardian, or testamentary trustee; or by a sheriff or other proper ministerial officer under the order, judgment, process, or decree of a court or legal tribunal of competent jurisdiction within this state, or by a sheriff upon a mortgage foreclosure sale the period of limitation is 5 years.

(2) When the defendant claims title under some deed made by an officer of this state or of the United States who is authorized to make deeds upon the sale of lands for taxes assessed and levied within this state the period of limitation is 10 years.

(3) When the defendant claims title through a devise in any will, the period of limitation is 15 years after the probate of the will in this state.

(4) In all other cases under this section, the period of limitation is 15 years.

If the state is involved, then see also, MCL 600.5821 Recovery of land; recovery of public ground; personal actions; maintenance, care, and treatment of persons in state institutions.

Sec. 5821.

(1) Actions for the recovery of any land where the state is a party are not subject to the periods of limitations, or laches. However, a person who could have asserted claim to title by adverse possession for more than 15 years is entitled to seek any other equitable relief in an action to determine title to the land.

(2) Actions brought by any municipal corporations for the recovery of the possession of any public highway, street, alley, or any other public ground are not subject to the periods of limitations.

(3) The periods of limitations prescribed for personal actions apply equally to personal actions brought in the name of the people of this state, or in the name of any officer, or otherwise for the benefit of this state, subject to the exceptions contained in subsection (4).

(4) Actions brought in the name of the state of Michigan, the people of the state of Michigan, or any political subdivision of the state of Michigan, or in the name of any officer or otherwise for the benefit of the state of Michigan or any political subdivision of the state of Michigan for the recovery of the cost of maintenance, care, and treatment of persons in hospitals, homes, schools, and other state institutions are not subject to the statute of limitations and may be brought at any time without limitation, the provisions of any statute notwithstanding.

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